Apple Trash Talking Spotify As It Prepares Its Competitor

from the all's-fair-in-love-and-competing-with-steve-jobs dept

There's yet another rumor going around that Apple is getting ready to launch a subscription music service. That's been rumored for ages, and it would be surprising if the company didn't do it. In fact, many were surprised that after Apple shut down music locker Lala that it didn't immediately launch a cloud based subscription offering. But, perhaps more interesting, is the fact that Apple has also been spending time trash-talking Spotify to music industry execs. We had mentioned, when Apple shut down Lala, that it would be a good time for Spotify to figure out how to launch in the US. The company has been trying for quite some time now, and the record label demands are basically impossible to meet. And it sounds like Apple is encouraging that. As Greg Sandoval reports:

In meetings in Los Angeles recently, Apple executives told their music industry counterparts that they had serious doubts about whether Spotify's business model could ever generate significant revenues or profits, according to two sources with knowledge of the discussions.

But Apple executives worried about the effects of a free music service might have on the rest of the market. They noted that it's tough to sell something that someone else is giving away, the sources said. One industry insider said it is only logical that if Spotify were allowed to launch a free-music service here, at a time when Nielsen recently reported that the growth of digital sales has flattened out, it could eat into the businesses of proven revenue-producers like Apple and Amazon.

Ah, the amazing ridiculousness of confused short-term thinking. While I also have questions about Spotify's ability to generate significant revenues long-term, the recording industry is making a huge mistake if it buys into the idea that Spotify is likely to cannibalize digital sales. If you look at reports in places where Spotify is widely available, such as Sweden and the UK, the reports suggest that what Spotify actually cannibalizes is unauthorized downloading. Yes, there are a bunch of reports that suggest Spotify gets people away from The Pirate Bay and into a system that at least gets the labels some money.

Erm, isn't that exactly what Apple's been doing since they launched iTunes? Weird how they forget that particular narrative when it suits them, yet it's been the industry's mantra of how iTunes and the like would never work.

"If you look at reports in places where Spotify is widely available, such as Sweden and the UK, the reports suggest that what Spotify actually cannibalizes is unauthorized downloading."

You mean that people who don't want to pay 99p/track will actually use a legal service if it's more reasonably priced? Shocking.

I also can't help but notice that the complaints seem to focus on the "free" part of Spotify without mentioning that there's actually a 3 tiered subscription model with various extra benefits to encourage payment (such as the ability to store playlists on your mobile phone while offline with the premium service). The free service only gives you 20 hours/month.

Re:

Since you asked, I have actually tried quite a few of the only streaming services (at the very least, their free trials!)

I liked Grooveshark's price ($3 month for VIP) but I listen to music 80% of the time on my Droid (hence why I paid for VIP) but was VERY upset when I realized that only some songs were available over 3G (e.g., some required wifi.) Now, I couldn't find this info anywhere on Grooveshark's site, or on the android app's page- though I did find mention of it in the user comments. I can't come up with a logical reason that some songs were 3G enabled and other weren't, but I canceled my subscription within 30 minutes of discovering it. Also, Grooveshark's selection is.. well, messy.

I eventually settled on Mog.com-- their android app is closer to beta than I'd like, but the selection is good. The $10/mo price point is pushing it, though. ($5/mo if you don't want phone use)

I fully plan on trying Spotify when (if?) it is released in the US.

Oh, and how did Mog.com change my music habits? I no longer pirate music, as there's no need to. I only ever listen to music on my phone or on my computer, both places I just use Mog.

Re: Spoti--who?

Streaming music service, started in Sweden, now the biggest in Europe. Free version is ad-supported, subscription version has higher-quality streams and can be used on your phone. Different from Pandora in that you can choose what tunes you want to listen to (rather than setting up a radio station, though you can do that to).

Anecdotally, I agree with the last paragraph. I basically never download music now. I don't need to, I can get pretty much anything I want through Spotify.

Since when were Apple an independant source for good advice? Apple advises music industry to wait till it has it's own offering (and can therefore cream more cash from fanbois), nothing new about that.